Indian economy is very unique in its structure. If you analyse the Indian economy, you will be able to see that the small and medium enterprises industry in India is a big player in forming it. For those living under a rock, it is one of the most successful sections and one of the fastest revenue-generating sectors. If by now you’re thinking why are we emphasising on the SME so much, more than 40% in the total export that India does comes from the SME sector. The SME business financing is one of the biggest talking points in India with 1150 groups and other 6000 minor or small groups in it.
According to the Reserve Bank of India, these are small scale industrial units which can be categorised by industries where the investment does not exceed rupees one crore with the exception of some medium industries like stationery items, pharmaceuticals, sports goods and hand tools where the investment can go up to 5 crore rupees.
Small and medium scale industries are basically those which does not have a large scale investment and the operational cost is also relatively lower. For instance, these are mostly leather, manufacturing, pottery and carpentry units.
Most of the entrepreneurs need funding to expand their businesses. Here comes the need of seeking a business loan. SME business loans enable entrepreneurs to expand and cater to the various needs of the business. The small business loan actually reduces the burden on the businessmen and help them to tackle the unprecedented business crisis. Keeping in mind unprecedented growth in the business sector and also in the banking sector and the ever-growing adoption of technology, there are various options to choose from. In this article let us talk about the various options for entrepreneurs to choose from, regarding the small and medium enterprises loans in order to start a new business and what kind of consequences they might face.
SME loan is one of the most famous small business loans for entrepreneurs because of the convenience of payback, GST business loan flexibility, and competitive pricing. These features make it very easy to avail and to become an instant business loan. Another reason for its popularity among businessmen is that sme business loan interest rate is very low compared to others. There are some different types of loans to choose from
A term loan is a form of business loan that provides fixed capital money for the banks to lend and a fixed payback option which is generally on monthly basis and fixed monthly installment for an unsecured business loan.
Line of credit is another kind of SME instant business loan which is created according to the needs of the applicant. In this type of GST business loan, the applicant can choose the capital money and they are only charged upon the used capital as per the sme business loan calculator. After the total repayment, the capital becomes eligible to be lend again.
Invoice financing is another kind of SME business loans which are very famous. In this form of unsecured business loan, the applicant can seek a loan on the basis of invoices for the due from customers.